Could use advice on renting to students by the room.

Question

Hey everyone,

I have been working on purchasing some rental properties and someone mentioned to me on another thread that renting by the room to students could be a profitable move?  I live in a town with a large state university.  I am aware of the wear and tear aspect.

Does renting by the room tend to be more profitable in this sort of student rental market?

How has it worked for any of you?

How do you figure out what to charge them in terms of a lump sum for utilities?

What utilities do you include and not include?

Is it just one rent payment to cover all of this?

I would love ANY advice any of you can give on this topic.

Thank you!!

Bill Dodge · Answer

Can not wait to see what everyone say as I am considering the same.

Roy N. · Answer

Brian H.

We have several student rentals in our portfolio, including two houses in which we rent furnished rooms to {predominately international} students.

Renting by the room will usually produce more revenue than renting a unit under a single lease.  However, the landlord typically will be carrying all of the operating costs (utilities, internet, etc), so more revenue does not always mean more net income.

There is also more administration as you have a lease with every individual rather than each unit.  You also become more implicated in housemate drama as each tenant has a relationship with you and not necessarily one with each other.

In our experience, a rooming house works best when you have someone you trust (and who is a little older) living at the property who serves as "Den Mother" to ensure the ship sails smoothly.

Thomas S. · Answer

Student rentals have existed for many decades, are well established and fully recognised and supported by the legislation. Each landlord must read and understand the regulations related to student rentals.

Student rentals, like C class rentals, produce well above average cash flow but defiantly require more hands on operations to make the flow.

Jeff B. · Answer

UNLESS you personally live in that property, you are operating a ROOMING facility and come under the State regulations for Hotels / Motels ....

IMO, think again.

Jeff B. · Answer

I fear so.  It takes a lot of follow-thru to parse out the legalities of X vs Y - - just look at the chaos of AirBnB/short term rentals - - the dust has yet to settle and even THAT is specific to the community.

Roy N. · Answer

Brian H. describes - one lease per unit ... all housemates are signatories to the lease and almost always each has a guarantor (since students typically have insufficient credit and rental history to qualify on their own).

Our principal rooming house services a particular subset of the student population (International Students) and my sister-in-law (who is a co-owner) lives in the house and serves as Den Mother.  The other house we have rented by the room this past year, was because we came into possession to have it leased for the academic year.

Andrew Johnson · Answer

Brian H. I looked into it but ended up thinking it wasn't such a great idea before even addressing the zoning thing.  I looked up apartments reviews in college towns where room-by-room renting was going on and just saw a flood of consistent negative reviews.  Complaints of new roommates coming in "out of nowhere" (it makes sense because the owner has to rent the room), people smoking pot (good luck proving who make the living room couch smell like weed and *just* evicting them), and just a ton of complaints.  I tend to opt for passive investments so getting into all of that just sounded like more than it's fair share of drama.  Not to mention you're pretty much stuck renting the place as furnished so there's additional wear-and-tear or furniture.  If you rent out a 1-bedroom apartment to a student there's a single point of contact, one person's security deposit if there's damage, one person to evict if things go really wrong, etc.  That said, I've never actually done it personally and I'm sure there's ways to make it run well.

Kelly N. · Answer

I rent to students, but not by the room.  In our local, there is special zoning for such a thing- Rooming House I think- and honestly I have no desire to get into it.  Tenants (especially young ones) in multifamily can be a big enough headache- why add the drama of shared bathrooms and kitchens to the mix?  Just rent the apartment/house out as a whole to a group, let them deal with the person to person drama within the unit.

That being said, we have one triplex that doesn't have the utilities divided, so their rent covers water, natural gas, and electricity.  The studio apartment we have in that rents quickly and easily when it is available, due to the price and the utilities being included.  So, it you do pursue this, I would say include at least the basic utilities, and  possibly consider including internet/cable as well.

Also, double check your local codes- where we are, no more than 3 unrelated adults may live together without specific zoning.

Brian H. · Answer

@Roy N. Are you familiar with what @Jeff B. is talking about? Is that something that is an issue where you are?

Thomas S. · Answer

How and what you do will depend entirely on the area you are operating in as you will need to do as all the other student landlords do to be competitive. You must take the time to learn your market.

In my city students rent for a one year term, usual begin to look in late winter to rent in September and the entire building is under one lease with every student on the lease. If one stops paying all others are responsible. Utilities are always extra and paid by tenants. All student tenants require parent guarantor.

Could use advice on renting to students by the room.

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